A Question of Insurance Fraud?

By Scott Burris

No, I mean it: this is a question to Bill of Health readers who know about the law on this topic.

This week, a colleague handed me a palm card she’d been given at a subway station here in Philadelphia. “Cash for diabetic test strips” it read.  Comparing prices on the company’s website with prices on Wal-Mart’s pharmacy page, it looked like the test-strip buyer pays about 20 cents on the dollar for “pre-owned” test strips.

The palm card and the website both stipulate that the strips be unexpired and in their original, unopened, factory-sealed boxes.

So, one asks, are there enough people out there who buy more diabetic test strips than they need, and are willing to take an 80% loss to ensure they are used by someone else? That seems unlikely.

There is another possible model, of course. If public or private insurance paid for the test strips, then 20 cents on the dollar is 20 cents profit (at least, minus a co-pay).  That’s where the law part comes in.  I’m no health care lawyer, but it would seem like some kind of chicanery to sell a medical device paid for by insurance.

Naturally, the sellers have their own lawyers. Here’s what the palm card said: “YES!! It’s legal to sell your diabetic test strips. Diabetic test strips are sold over the counter at most major retailers and you do not need a prescription to purchase them. Prescriptions are given ONLY so that the strips can be covered by insurance for those who do have insurance.”  On the other side, the card helpfully advises “We cannot take boxes with a red label band that say for Medicare or Medicaid.”

I have no basis for believing that any of these companies are actually buying government-paid test strips, or looking the other way as creative sellers find ways to repackage strips purchased on the public’s dime. That still leaves the private insurance payer.

And even if there are no issues of financial wrong-doing, there is a concern in my own domain of public health.  Proper monitoring is essential to the health of people with diabetes. If people are selling their strips – choosing between the money and their health – public health is the loser. If this is, as one might expect, more likely to happen among the poor than the rich, then we might be witnessing one small side-path leading to health disparities.

Because this is not penny-ante stuff.  As one writer put it, “self-monitoring of blood glucose (SMBG) is big business and is getting bigger every year.” Global sales of SMBG products in 2008, the same writer reported, reached $12.8 billion.  In the U.S., there are almost 24 million people with the disease, more than ¾ of whom have been diagnosed, according to CDC.

So what do you think? Big problem? Legal issues? Or just a clever business model that happens not to send the right messages to people with diabetes?

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2 thoughts on “A Question of Insurance Fraud?

  1. Pingback: A Question of Insurance Fraud? | Temple University Beasley School of Law

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